Even as fast casual and casual brands try to compete with QSRs on value, most have hiked their menu prices over the past year.
Though steady inflation has made some consumers more sensitive to price, the National Restaurant Association and many major chains predict demand for eating will trumps concerns about discretionary spending. According to the association, 64% of diners consider restaurants essential to their lifestyle.
Eighty-seven percent of restaurant operators raised prices in 2022, according to the NRA’s State of the Industry 2023 report, and 59% changed the food and beverages they offered to counter rising food costs.
Take a look at how fast casual and casual restaurant companies updated their menu prices in 2022.
- Price increase in Q4 2022: 7.5%
Applebee’s franchisees took an average of 7.5% pricing in Q4 2022 year-over-year, Dine Brands CFO Vance Chang told investors in February. Inflation was 11%, which is down from the 23% seen in the first half of last year.
- Current price increase: 9% to 10%
For 2023, the fast casual company expects to have mid-single-digit price hikes and is currently running at 9% to 10% pricing, which CFO Jack Hartung said he expects will ease in early Q2. Chipotle will focus on the impact of inflation as it evaluates future changes to pricing.
El Pollo Loco
The company will feature an “add-on” panel to its menu board to drive higher checks, and El Pollo Loco plans to eventually grow its menu via “permanent platforms versus six-to-eight-week limited time offerings,” CEO Larry Roberts said during the chain’s Q4 2022 earnings call.
El Pollo Loco will also focus on desserts and catering as “significant opportunities for incremental sales,” Roberts said, and is developing a new catering program to capture demand from consumers returning to offices and gathering in larger groups.
The company will also work to simplify its menu, including reducing the time it takes to prepare salsa, CFO Ira Fils said.
- Q4 2022 price increase: 10%
IHOP franchisees took pricing of 10% on average in Q4 2022 year-over-year, Dine Brands CFO Vance Chang told investors in February. Inflation is still high at IHOP, hovering at about 20%, which is in line with the 21% inflation reported in the first half of the year.
Noodles & Company
- Price increase in Q4 2022: 9%
Pricing was up 9% during Q4 2022 following actions taken during the first half of the year, CFO Carl Lukach said during a March earnings call.
The fast casual chain took incremental pricing of about 5% in February and pricing is expected to be up 10% for Q1 2023. The chain doesn’t anticipate additional price increases this year unless there are significant economic disruptions. The company plans to use digital menu boards in the future to implement dynamic pricing, as well.
- Q4 2022 price increase: 7.9%
Portillo’s increased pricing by 7.9% for certain menu items, which helped boost average check by 6% during the fourth quarter 2022, Portillo’s CFO Michelle Hook told investors in March.
Portillo’s expects overall commodity inflation to ease this year, estimating a mid-single digit increase. Inflation moderated in the last quarter, decreasing to 14.5% from 15.4% in Q3 2022. In mid-January, it raised prices by a net 2%.
- Price increase in 2022: 2% to 10%
Shake Shack partially credited its October menu price hikes with boosting restaurant-level profit margins, which reached 18.8% in the fourth quarter 2022, CEO Randy Garutti told investors.
The chain raised prices between 2% and 10% across price tiers last year to counter “high single-digit food and paper inflation” and labor costs, he said. In March 2022, the chain hiked menu prices by 3.5% and an additional 5% on third-party delivery platforms.
The company will continue to lean on “strategic menu pricing” to drive long-term growth, Garutti said. Shake Shack expects to “maintain a blended high single-digit price across our channels in the first half of the year,” he said. If beef prices increase, a “very small” price increase could soon be implemented, CFO Katie Fogerty said on the call.